Insurers Collusion

South Korea's antitrust watchdog said Thursday that it has fined nine life insurers a combined 20.14 billion won (US$18.06 million) for colluding to fix commission rates.

The nine are Samsung Life Insurance, Kyobo Life Insurance, Hanwha Life Insurance, Shinhan Life, MetLife, Prudential Life Insurance, ING Life Insurance, AIA and Allianz Life Insurance, according to the Fair Trade Commission (FTC).

The watchdog found that they colluded to fix commission rates by setting the minimum amount of benefits for their variable insurance products that customers are guaranteed to receive when they reach eligible ages or conditions.

Variable insurance is a type of insurance product whose benefits could differ based on investment returns. The minimum benefits are guaranteed to ease worries that the amount that customers receive could plunge when investments go awry.

In return for setting the guaranteed minimum benefit, insurers charge their customers commissions.
"The rates are one of the important factors that customers take into account when choosing what insurance products they will purchase. They should be determined through free competition among market players," the FTC said in a press release.

In 2001, Samsung Life, Hanwha Life, Kyobo Life and Prudential were found to have been involved in fixing the rates for variable insurance products. In 2002, all of the nine cited companies were engaged in similar practices.

Samsung Life was slapped with 7.39 billion won in fines, the largest of all, followed by Hanwha Life with 7.12 billion won. Kyobo Life and MetLife were fined 4.09 billion won and 874 million won, respectively, the FTC said.

Of them, the watchdog said that it will refer five companies -- Samsung, Kyobo, Hanwha, Shinhan and MetLife -- to prosecutors for further investigation.

Uninsurable Increases WIth Age

It's typically a fundamental truth that life insurance serves as a critical role in protecting a family from the possibility of financial hardship. In its most basic sense, life insurance is designed to protect the economic value of a human life - most commonly the "breadwinner" or majority income earner of the family, but it is also associated with business uses in the form of buy-sell agreements, key person indemnification, credit enhancement, business continuation and employee benefits.

Regardless of its purpose and notwithstanding variations of term and whole life policies, time is of the essence.

Most income producing individuals have dependents that rely on that income for the amenities of everyday life; not to mention the continuation of lifestyle, residence, education and retirement.
It is a morbid reality, but one that is paramount to plan. And in many situations, it is prior to death but after diagnosis that the hourglass has run out on the option of providing protection for one's family.

An insurance professional, recently received a phone call from a close friend asking if he still had the ability to purchase life insurance...while notifying him that he had been diagnosed with Stage 2 cancer.

Before the call, his friend came to the daunting realization of the risk he took by not buying life insurance. In the past, the two had casually discussed its growing importance, especially after the birth of his daughter and purchase of a new home. He claimed to have had plenty of coverage and decided that an evaluation was not necessary.

The window of opportunity to purchase or increase the amount of life insurance may be closed, however every option is being evaluated - primarily in exploration of the group policy with his employer.

It's glaringly obvious that an individual that dies prior to obtaining life insurance will not have death benefit proceeds - but what may be less known is that most life insurance policies evaluate your insurability with a health questionnaire and medical examination.

Unless finances are such as to alleviate the risk associated with a death or disability of an income producer, acquiring some form of life or disability insurance is a discussion worth having. And prior to any diagnosis that may make you un-insurable.

Affordable Insurance Scam

Don’t let your desire for affordable life insurance cause you to fall victim to one of the following life insurance scams.

Teaser Rates
You might see an advertisement with some wonderful, introductory price like “as low as $1 a day” for term life insurance. But don’t be fooled. People over 50 aren’t going to get that rate on an ongoing basis. You might get it for one month. That’s a very low rate offer, and it’s only for very young, very healthy people.

What the insurance company is hoping is that you’ll get sucked into dealing them without shopping around for a better rate than what they’re really going to offer you month after month. Read the small print. You want a policy where the premium stays the same, rather than increasing at regular intervals- and potentially pricing you out of insurance when you need it the most.

Check with an independent life insurance agent. They will be able to offer you life insurance that will be affordable for the entire term of the coverage. They have many options and won’t give you a teaser rate.

Only Whole Life Insurance
If you’re in the 50-plus age range, don’t listen to someone who tells you that whole life is your only option.

Term insurance is still a product where you can usually qualify for a good amount of coverage, even in your more senior years. And, you CAN get reasonable term rates and death benefit amounts as you age. We prefer level term insurance where the premium and the face amount remain the same throughout the term period.

And there’s also the option of universal policies, which provide the flexibility that many people are after. You can get lifetime coverage with a universal policy that will generally be less expensive than whole life insurance.

Depending on your situation and why you’re buying the policy, a term or universal policy might be the most practical and affordable life insurance for you—so don’t be talked into not considering those options.

A Rate that Seems too Good to be True
Preferred Plus is the best health rating and so of course everyone wants it—it means a better deal. But if you have some medical issues (e.g., diabetes, history of heart disease, smoking) tr take certain medications, it’s a fantasy to think you’re going to get Preferred Plus.

If you’re dealing with an agent who tells you can get this in spite of your medical issues, don’t believe it. It’s not up to the agent—it’s up to the insurance carrier. The agent can only give an estimate, which is in no way binding.

If an agent tries to win your business by promising the ability to get you a top health rating, it’s time to move on and look for an independent agent who’s built a reputation for integrity. An agent can only give you their best estimate, and if you have health issues, don’t expect the best rating category. It just doesn’t make any sense.

Be suspicious if you’re dealing with an agent who doesn’t ask you for a fair amount of health information. The more detail agents have, the better they can estimate what your rating will be. When you get different pricing from two different agents, you need to consider the amount of information they each requested. More info- better estimate (quote). Remember, the insurance company will always give you the lowest rate it can under its underwriting guidelines.

Here’s an example:

• You talk to 2 agents.
• Agent A thinks you will get a standard rating and Agent B says preferred.
• You should ask agent A why standard when someone else thinks preferred. They should be able to explain to you why you won’t qualify for preferred.
• Applying with Agent A may be your best deal. They will have chosen the lowest cost company at that higher rating.
• If you go with Agent B and you get a standard rating (the higher rating), you will now be with a more expensive company than if you had gone with Agent A.

The lowest quote is not always the best quote, the most accurate quote, or sometimes even a possibility.

The Bottom Line
To avoid scams and get the most affordable life insurance, it’s best to deal with an experienced, reputable independent life insurance agent who’s built a lasting business on consistently getting
customers the best value possible.

Insurance - Risk or Investment

Consider this. Your friend tells you of an investment product, which generates a cash flow of RM1 million for your family if you die of natural causes during the next 20 years, but nothing at all if you survive. To buy this product, you have to invest only RM10,000 every year for the next 20 years. And here is the attractive feature of the product: If you die during the period of the investment contract, say, in the 6th year, your family does not have to make the annual investment, but will receive RM1 million! Will you buy this investment product?

Risk
If you are a typical individual, chances are you will consider this investment risky. You will evaluate your chances of surviving in the next 20 years. And if the likelihood of survival is high, you will rightly conclude that the investment is unattractive. After all, why pay over the 20-year period and receive nothing in return? You would have realised that the product we are discussing is typical term insurance policy. And such contracts are not investments. They are just… plain insurance — contracts that indemnify your family for loss of your income should you die. Of course, discussing about death or dying is not really exciting, but nevertheless necessary. Why?

Loss of income

When you consider your insurance policy as a tool to indemnify a possible loss of income in the future, you may seriously consider term insurance policy — contracts that do not have any survival benefits. But when you consider the premium that you pay as investment, you require something in return, even if you survive. And that compels you to look for an investment feature in an insurance contract. Insurance companies oblige you by offering policies with survival benefits. The issue is that such policies carry high fees and low returns on the investment component (remember unit-linked insurance policies?).

 

Most of you nevertheless prefer such policies to term insurance because you may be suffering from what behavioural economists call ‘framing’. This refers to behaviour where you react differently depending on whether a product is presented as a loss or a gain. Studies suggest you will typically avoid risk when offered a positive ‘frame’ while seeking risk when you are offered a negative ‘frame’.

 

The bottom line: Consider life insurance premium as a cost to ‘insure’ your life, not as an ‘investment’ on which you need a return. You might then, perhaps, consider term insurance. After all, term insurance is just like your motor-vehicle insurance. You do not expect returns on your motor-vehicle insurance, do you?

AXA Overseas Student Medical Insurance

AXA Affin General Insurance Bhd stands to earn up to RM42 million in gross premiums through an exclusive tie-up with Education Malaysia Global Services (EMGS) to provide insurance coverage packages for foreign students in Malaysia.

The general insurance company, which is 34%-owned by Affin Holdings Bhd, won an open tender against 13 other insurance companies, to provide insurance coverage for between 30,000 and 50,000 foreign students in the country. The students are expected to pay between RM500 and RM850 each in premiums per year.

Insurance company will provide three types of medical and health insurance for a maximum annual coverage of between RM20,000 and RM50,000 at lower than market price because EMGS does not derive any commission from the policies. There have been some complaints from insurance agents who are disgruntled about losing business due to the EMGS-AXA Affin tie-up. The arrangement is subject to review after three years from February this year when it was implemented.

Medical Exam For Life

When you apply for a life assurance policy, you select a desired and affordable sum assured. The sum assured is the amount of money payable to one or their dependants at the maturity date of the policy or on occurrence of the insured event, for example death, disability and diagnosis of a critical illness.

 

Depending on the amount of the sum assured, evidence of a medical examination will be required. The term ‘free cover limit’ is used by insurers to refer to the amount of the sum assured below which no medical evidence is required. In this case, only a fully-filled-out proposal form and the first premium are required to create a contract between yourself and the insurance company.

 

For all amounts above, it is standard practice to undergo some form of medical appraisal. People often think that this is some kind of brutal and grueling obstacle course insurance companies devise to weed out ‘undesirable’ clients. In truth, the exam you will receive is much like a standard physical at your doctor’s office, and in some cases, it may be a little less stressful.

 

The medical is used to find any underlying conditions that may or will shorten your life, or adversely affect your overall health. They often involve a blood test, used to check for conditions, both hereditary and acquired. Urine analysis is also applied to, among other things, detect possible illicit substances.

 

A physical body exam is also conducted, as is a blood pressure measurement. The results from the tests are used by an underwriter to set your insurance rating, and determine what your policy premium will be. Most likely, you will get a copy of the test results for your own records, and if there are further tests you need, a follow-up round of testing will be scheduled.

 

You don’t have to be an Olympic athlete, or a professional sportsman to qualify for a comprehensive life insurance policy. Therefore, the idea of being denied coverage because of your health should not prevent you from buying and benefiting from life insurance. For what it’s worth, it might just be that health check that ultimately determines your quality of life.

 

Worth considering, isn’t it?

Alliance Sold Off AIA AFG Takaful

Alliance Financial Group Bhd yesterday informed the Bursa in a filing that it is disposing its 30% interest in AIA AFG Takaful Bhd to American International Assurance Bhd (AIA) for RM45 million.
The joint venture conducts family takaful business and it has reportedly brought in more than 6,000 cases, with new premiums in the region of about RM20 million during its fi rst 10 months in 2011.

But, given the recent slew of insurance investments within Asia, the stake buy back by AIA could be considered a steal — seeing how it agreed to pay US$1.7 billion (RM5.23 billion) for ING Group NV’s Malaysia life insurance operations last October.

Financial Service Act (FSA)

The proposed Financial Service Act (FSA) and Islamic Financial Service Act (IFSA) will extend beyond commercial banks to have a huge impact on the insurance industry when officially enacted.

The insurance industry players had been having closed meetings and discussions with Bank Negara Malaysia (BNM) on the matter whereby proposed provisions would include the requirement for composite players to convert into a single insurance business, the corporatisation of private Islamic financial services companies, the 50 per cent ownership cap on Financial Holding companies (FHCs).

Both the FSA and IFSA would entail stricter enforcement of group-wide risk and capital management on financial services, as well as greater regulatory control over financial areas such as shareholder control and core operations.

The research house noted that the proposed acts were passed by the Dewan Rakyat in November
2012 and might come into force as early as May 2013 once gazetted.

“The FSA will prohibit insurers to operate both life insurance (LI) and general insurance (GI) simultaneously. The same conditions apply to takaful companies with regards to simultaneous general and family takaful operations via the IFSA,” the report underscored.

As such, insurance and takaful companies holding composite licences would be directly affected. However, players would be given a five-year transition period to convert into single insurance businesses.

RHB Research opined that these new laws might lead the affected insurance and takaful players to the path of setting up entities to manage their GI and LI operations separately in order to retain the businesses.

The research house believed that the separation of insurance or takaful businesses under different
managements might result in stronger and sharper business focus and might promote industry growth in the long run.

It noted further that the new rules were in line with insurance laws globally, aimed at cutting down on instances where composite insurers diverted long-term life insurance investments to plug short-term cash flow gaps arising from general business claims.

Maximum 10% Insurance Ownership

Individual owners of insurance companies will have five years to comply with the 10-percent shareholdings limit of the yet-to-be gazetted Financial Services Act 2012 (FSA).

This was the “transitional requirement” stated in a briefing by Bank Negara Malaysia (BNM) to insurers on the Act on Feb 6, 2013.

“Existing shareholders exceeding the limit shall take steps to comply within five years from the commencement date,” BNM said in its handout sighted by KiniBiz.

The Act is expected to commence on May 2, BNM said in the handout.

Among those who could be affected are Tune Insurance owners Tony Fernandes and Kamarudin Meranun - who collectively own 72 percent of the company - and Lonpac Insurance owner Teh Hong Piow who owns 44 percent of the company.

Section 92 of the Act states that individuals have a maximum permissible holding of 10 percent.

The Act appears silent on any grace period for the owners of banks.

Banks owned by individuals include Public Bank (24 percent owned by Teh), Hong Leong Bank (79 percent owned by Quek Leng Chan) and Ambank (17 percent owned by Azman Hashim).

Live A Good Life

Because none of us have many years to live, and we can't take along anything when we go, so we don't have to be too thrifty.

Spend the money that should be spent, enjoy what should be enjoyed, donate what you are able to donate, but don't leave all to your children or grandchildren, for you don't want them to become parasites who are waiting for the day you will die!!
Don't worry about what will happen after we are gone, because when we return to dust, we will feel nothing about praises or criticisms. The time to enjoy the worldly life and your hard earned wealth will be over!

Don't worry too much about your children, for children will have their own destiny and should find their own way.

Don't be your children's slave. Care for them, love them, give them gifts but also enjoy your money
while you can. Life should have more to it than working from the cradle to the grave!!
Don't expect too much from your children. Caring children, though caring, would be too busy with their jobs and commitments to render much help. Uncaring children may fight over your assets even when you are still alive,and wish for your early demise so they can inherit your properties and wealth.
Your children take for granted that they are rightful heirs to your wealth; but that you have no claims to their money. 50-year old like you, don't trade in your health for wealth by working yourself to an early grave anymore. Because your money may not be able to buy your health.

When to stop making money, and how much is enough (hundred, thousands,million, ten million)?
Out of thousand hectares of good farm land, you can consume only three quarts (of rice) daily; out of a thousand mansions, you only need eight square meters of space to rest at night.
So, as long as you have enough food and enough money to spend, that is good enough. You should live happily. Every family has its own problems. Just do not compare with others for fame and social status and see whose children are doing better, etc., but challenge others for happiness, health,
enjoyment, quality of life and longevity.

Don't worry about things that you can't change because it doesn't help and it may spoil your health.
You have to create your own well-being and find your own place of happiness. As long as you are in good mood and good health, think about happy things, do happy things daily and have fun in doing, then you will pass your time happily every day.
One day passes without happiness, you will lose one day. One day passes with happiness, and then you gain one day.

In good spirit, sickness will cure; in a happy spirit, sickness will cure faster; in high and happy spirits; sickness will never come. With good mood, suitable amount of exercise, always in the sun,
variety of foods, reasonable amount of vitamin and mineral intake, hopefully you will live another 20 or 30 years of healthy life of pleasure.
Above all, learn to cherish the goodness around... and FRIENDS. They all make you feel young and "wanted"... without them you are surely to feel lost!!

As I Mature